Every home has a past and as the term ‘stigma’ signifies a mark of disgrace, a stigmatized property is essentially one that Buyers may shun for reasons other than its physical condition.
Most stigmatized properties are usually associated with some type of event that leaves a psychological condition on the home. Some good examples of stigmatized properties include homes with a history of hauntings, suicide, violent crime, or other similar types of event.
There are also many circumstances which could be considered a possible stigma including a home with a neighbor who is a known hoarder or a registered sex offender.
The disclosure requirements for Sellers regarding stigmatized properties vary by state. Many states do not require disclosures be made to Buyers on properties with psychological stigmas as it is considered not pertinent to the home’s physical condition. Some states however, do require the disclosure by the Seller of any material fact that could impact what a Buyer is willing to pay for a property.
Caveat emptor is a Latin phrase which translated means “buyer beware”. In many states, the burden is on the Buyer to do his due diligence and fully examine a property and satisfy all concerns before he purchases.
It makes sense that Sellers can be fearful or reluctant to reveal a home’s negative past, however disclosure is recommended to avoid any potential legal consequences or claims of misrepresentation. If a Seller is questioning whether a particular disclosure is required, he should contact an attorney.
Although stigmatized properties may be shunned by Buyers, the history they share can also be viewed as interesting. Some listing agents will use creative marketing strategies to accentuate the home’s unique history in hopes of appealing to Buyers with an appreciation for the macabre or unusual while other listing agents prefer to take a more timid approach.
A good rule of thumb for Buyers concerned about the history of a home is to do your research and ask a lot of questions.